Credit card portfolio growth slows to 11% in FY25, lowest in three years, ET BFSI

Credit card portfolio growth slows to 11% in FY25, lowest in three years
The growth in credit card outstanding portfolios of banks slowed sharply to 11.2% year-on-year in FY25, marking the lowest expansion in three years, according to Reserve Bank of India (RBI) data. The total credit card portfolio stood at Rs 2.87 lakh crore as of February 2025, compared to Rs 2.58 lakh crore a year earlier.

This moderation comes after significantly stronger growth in the previous two years—31% in FY24 and 29.2% in FY23. The deceleration has been attributed to regulatory measures introduced by the RBI to rein in unsecured consumer credit and strengthen financial system stability.

The central bank’s move in November 2023 to raise risk weights on credit card receivables led to higher capital requirements for both scheduled commercial banks and non-banking financial companies. While risk weights on loans to NBFCs were restored in February 2025, the higher capital norms on credit cards remained unchanged, reinforcing a cautious stance on unsecured lending.

Bank-level data reflects the broader trend. ICICI Bank saw its credit card portfolio growth drop to 11.7% in FY25 from 35.6% the previous year. SBI Card recorded a 6% fall in new account additions over the same period.

New card issuance

The pace of new card issuance remained slow due to concerns over rising defaults, particularly in smaller cities, where mis-selling has been a persistent issue. While credit card penetration is expected to expand in the long run, analysts believe near-term asset quality challenges will continue to restrain aggressive growth.
Asset quality pressures remained elevated, with the proportion of overdue credit card dues in the 90+ days past due category stable at 2.0% quarter-on-quarter in Q3 FY25, according to TransUnion CIBIL India. Rising defaults, particularly among new-to-credit borrowers in Tier-2 cities and beyond, have pushed lenders to focus more on premium customers, shifting away from riskier segments.In April, InCred Equities maintained a cautious stance on SBI Cards. Although the company has seen a gradual uptick in credit card issuance, its asset quality stress remains a concern. Despite a slight improvement in gross non-performing assets, which declined by 3 basis points quarter-on-quarter to 3.24%, credit costs surged by 40 basis points to 9.4%, raising concerns over profitability. The brokerage remains sceptical about SBI Cards sustaining its premium valuation, given its weaker capital adequacy and the impact of tighter risk weights, which are likely to limit its ability to gain market share in overall spending.The slowdown is expected to be temporary, with expectations of a recovery in FY26 as policy rates ease and the effects of tighter capital requirements begin to normalise.

• Published On May 21, 2025 at 07:53 AM IST

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